The level of 22000-21900 is significant for Nifty because it is the 38% retracement of year high-low levels, says Anand James, Chief Market Strategist, Geojit Financial Services. He explains that it is also the 50-day SMA support which Nifty has acknowledged on three consecutive days, despite strong attempts to penetrate. Edited excerpts from a chat:Nifty ended the week with a loss of around 2%. How big is the support at around 21,900-level for the coming week?
Anand James: Seasonality favours being positive in March, especially in an election year, during which time, the month has seen strong gains in the past three such years. The 22000-21900 is significant for two reasons. One, being the 38% retracement of year high-low. Two, being the 50-day SMA support which Nifty has acknowledged on three consecutive days, despite strong attempts to penetrate. Incidentally, Nifty has never crossed below this key MA since November 2023. While we acknowledge the respect given to these two key pivots, we are inclined to believe that they are more vulnerable now, bringing 21670 as the nearest objective, while projecting 20250 as the likely trough, should we see a collapse. Alternatively, a direct rise above 22050 could allow a relief rally, but unless we see a close above 22400, the prospects of a dive deep down would be alive.

Given the 3% cut seen in the banking index, how should traders position themselves for the week ahead?
Anand James: The Nifty Bank index has slipped back inside the descending broadening wedge, forcing us to cut back the breakout objectives that we had laid out last week. Two dojis in as many days point to bearish exhaustion, and we could possibly see a recovery, but there are no outright indications to view such a move as anything other than a dead cat bounce. Favoured view expects slippage to 45900, but a pull back above 47000 could serve to cut back negativity.

Midcap and smallcap indices bled heavily. Do you see more pain ahead? Is it time to buy the dips or wait for the dust to settle down?
Anand James: Thursday’s recovery rally was encouraging, but Friday saw momentum fizzling off, taking our attention towards the 38% fibo where the bounce back of Nifty Midcap index has seemingly ended. This nudges us to view this move as a dead cat bounce, potentially pointing towards more falls to fully straighten the oscillator divergences that have been in play for months on. Put differently, it is not relative cheapness that we are weighing now, but rather the sustainability of the recovery attempts. We are of the view that risk reward is not in favour of buying into dip right away.

PSU stocks were among the worst hit. Do you see the possibility of the Nifty PSE index breaking down further?
Anand James: PSE index has had the largest fall this month since last March 2023 during which period it has been on a vertical uptrend. The 50 day SMA, which has supported the index all through this period has finally seen three days of consecutive penetration, amply displaying the strong bearish undercurrent. However, on all these three days, the index managed to close not much far from the key MA, suggesting that the index is not willing to give up without a fight. This was visible in the second half of Friday, when there was a strong pull back, which was led by the top five index constituents, which incidentally contribute about 50% to the index. This encourages us to start next week on an even keel, without hopes of a recovery still alive.
Give us your top ideas for the week.

FCL (CMP: Rs 364)
View : Buy
Targets : Rs377 – 390
Stoploss : Rs 350
The stock has been on a decline since the middle of last month and seems to have taken support around the rising trendline of 335 from where a bounce is underway. 14D RSI is near oversold region and the MACD histogram has shown signs of exhaustion at lower levels supporting our expectation of a pull in the near term. We expect the stock to move towards 377 and 390 in the coming few weeks. All longs may be protected with stoploss placed below 350 levels.

FINCABLES (CMP: Rs 877)
View : Buy
Targets : Rs 920 – 950
Stoploss : Rs 849
The stock has been on a decline since January 2024 and seems to have made a base. It has formed a hammer candle in the weekly charts near the horizontal support zone of 840. The MACD histogram in the weekly timeframe is showing signs of exhaustion at lower levels warranting a pull back. Also, it has formed a Morning Star candle, a reversal candle pattern, in the daily time frame supporting our reversal view. We expect the stock to move towards 920 and 950 in the next few weeks. All longs may be protected with stoploss placed below 849.